drilling-for-jobs in new york

Download Drilling-For-jobs in New York

Post on 13-Apr-2018




0 download

Embed Size (px)


  • 7/27/2019 Drilling-For-jobs in New York


    What the Marcellus Shale could mean or New York

    July 2011

    Drilling for Jobs

  • 7/27/2019 Drilling-For-jobs in New York


    Drilling or JoWhat the Marcellus Shale could mean or New Yo

    July - 20

    Section itle Page

    I. Executive Summary 3II. Introduction 4III. Te Importance o Developing

    Natural Gas Resources5

    IV. Te Marcellus and Other Shale Plays 7

    V. Recent Activity in Pennsylvania andNew York


    VI. Economic Impact o the Marcellusin Pennsylvania


    VII. Real Property ax Benefits 12VIII. Marcellus Shale Drilling: Effects on

    the County Level13

    IX. Economic Development with andwithout a Moratorium 15

    X. Conclusion 17XI. List o Charts 19XII. Endnotes 20XIII. Bibliography 21

    able of Contents

    Tis report is produced byTe Public Policy Institute o New York State, Inc.

    Acting-President: Heather Briccetti, Esq.

    Principal Authors: Robert M. Lillpopp and Sonia A. Lindell

    Production Editor: Robert M. Lillpopp

    Contributing Editors: Michael Moran, Ken Pokalsky and Darren Suarez

    Copy Editor: Anna M. DeLisle

    July 2011

  • 7/27/2019 Drilling-For-jobs in New York


    Drilling for JoWhat the Marcellus Shale could mean or New Yo

    July - 20

    Executive Summary

    here are very few opportunities available

    to New York State with the same job-reating potential as exploring and developing theMarcellus Shale formation. The safe and sustainableevelopment of the Marcellus can help to transformhe economy in New Yorks Southern Tier. The

    effects of the recent global recession are stillesonating in much of the state, and it would be

    unreasonable to disregard the substantial economicbenets that would come with utilizing this valuablenatural resource. We need only to look south intoPennsylvania, where 48,000 private sector jobsn Marcellus Shale-related sectors were created in2010, to see how development of this resource has

    positively affected their citizens and businesses.

    f New York fails to allow the development of thisesource, the state stands to lose over $11 billionn economic output and thousands of private sectorobs between 2011 and 2020.iBy conservativeestimates the development of the Marcellus hashe potential to create 37,572 new jobs each yearn New York,ii jobs that may pay over $79,184nnually over double the average private sector

    wage upstate.

    The Public Policy Institute (PPI) report builds off

    he ndings of earlier studies and examines theeconomic impact and potential private sector jobreation that developing the Marcellus Shale would

    have in New York State. It compares recent jobrowth in Pennsylvania to counties in New Yorkoutside of the New York City watershed) where

    Marcellus Shale development is expected.

    This report compares how individual counties inboth states have been affected by Marcellus Shaleevelopment. It examines employment statistics

    n Tioga County, New York and Bradford County,Pennsylvania which had the most wells drilled

    n 2010 and also the second lowest unemploymentate in Pennsylvania in March 2010.

    The availability of abundant natural gas andelectricity could spur new industrial developmentnd lead to gains in employment, economic outputnd tax revenues.

    Once Marcellus Shale development begins, the

    following economic achievements are projected:

    In a ve-county area outside of the New YorkCity watershed, with 500 wells drilled per year,Marcellus Shale development could result in atotal of more than 15,500 direct jobs and anadditional 47,120 jobs by applying the 3.04RIMS II multiplier, for a total of 62,620 jobs.

    Even with a moratorium in place, New Yorklandowners are seeing income from leasing thedrilling rights to their land. Once developmentbegins, many will see royalties from producing

    wells. In Pennsylvania some landowners haveseen signing bonuses as high as $2,000 peracre and a royalty rate of 12.5 percent.

    Local, state and federal tax revenues couldincrease by more than $214 million (in 2010dollars) in 2015.iii

    Anti-drilling apprehension has delayed shalegas exploration in New York State, despiterecent advances in wastewater technologyivandsupport from diverse sources, including the U.S.Environmental Protection Agency.vAlthoughPPIs report focuses solely on non-environmentalmatters, its important to note that natural gas isa clean burning fossil fuel which emits 60 percentless carbon than coal.vi Additionally, New York hassome of the most strict environmental standardsin the nation typically exceeding other statesand federal standards and the implementationof a new regulatory regime governing high-volumehydraulic fracturing will continue this trend.

    After analyzing the economic impact andprivate sector job creation associated with thedevelopment of the Marcellus Shale, PPI concludesthat New York must move swiftly to take advantageof the transformative opportunity that has beendocumented below the state line in Pennsylvania.

    New York has a great opportunity to continue itslong history of exploration and development ofnatural gas resources and pursue an extraordinaryeconomic opportunity for upstate regions.

  • 7/27/2019 Drilling-For-jobs in New York


    Drilling for JoWhat the Marcellus Shale could mean or New Yo

    July - 20


    Anywhere from 168 trillion to 516 trillioncubic feet of natural gas existsviiin theMarcellus Shale, a 95,000 square mile black shaleormation spanning from Ohio and West Virginianto Pennsylvania and southern New York. Whileexposed at the ground surface in certain regions,he Marcellus formation runs over 7,000 feet deepn the Delaware River Valley along the Pennsylvaniaborder.

    The Marcellus Shale spans the length of theSouthern Tier in New York State, from Chautauquao Greene and Ulster Counties. For this report, PPI

    assumes no drilling will occur in and around theNew York City watershed.

    The recent improvements in drilling technologyhave greatly increased the viability of exploringhe Marcellus Shale; namely, the combination of

    horizontal drilling and hydraulic fracturing (theatter involves pumping a mixture of water, sandand chemicals down the well under high pressureo create fractures in the gas-bearing rock). Theractures are held open by the propping material,

    and additional gas is then able to escape intohe well. Fracking uid is 99 percent water and

    contains small amounts of chemical additivesincluding friction reducers, bactericides andemulsion elements. New York, along with otherstates, generally require the disclosure ofchemical additives to its environmental regulatoryagencies, with public disclosure of non-trade secretinformation.

    Its also critical to note the importance of continualdrilling, since natural gas wells tend to have steepproduction decline curves (although they continueto produce for 30-50 years, some even longer). Acertain number of wells must be drilled each yearin order to continue extracting a high volume ofnatural gas.

    Now that the New York State Department ofEnvironmental Conservation (DEC) has updatedcurrent drilling standards to avoid adverseenvironmental impacts of shale gas exploration, itis important to examine the economic advantagesthat natural gas drilling will have in terms ofprivate sector job growth and increased taxrevenue for New York.

    New York gained 42 jobs in Oil and GasExtraction and Support Activities or Mining

    Pennsylvania gained 4,355 Oil and Gas

    Extraction and Support Activities orMining jobs rom 2009 - 2010

  • 7/27/2019 Drilling-For-jobs in New York


    Drilling or JoWhat the Marcellus Shale could mean or New Yo

    July - 20

    Te Importance o Developing Natural GasResources

    Estimates vary on the amount of recoverable gas in the MarcellusShale a 20 percent recovery rate would place it at 489 trillioncubic feet.viiiAverage natural gas consumption in New York

    State is 1.1 trillion cubic feet per year, according to the Departmentof Environmental Conservation. Given this gure, utilizing the naturalgas resource right in our own backyard would be advantageous forresidential, commercial, industrial and electrical needs. Residentialconsumption made up 36 percent of total natural gas consumptionin New York State in 2009, followed by electric generation, whichaccounted for 31 percent of in-state consumption. Although New Yorkaccounted for 5 percent of total U.S. gas consumption in 2009, itproduced only 0.2 percent of the nations total. Pennsylvania consumed3.5 percent of natural gas in the U.S. and produced 1.3 percent of the

    nations total.

    Between 2006 and 2010, U.S. shale gas production grew by an averageof 48 percent per year, up from an average of 17 percent annual yearlygrowth rate from 2000 to 2006. Projections for natural gas productionestimate that by the year 2035, the U.S. will be producing 23.4 trillioncubic feet of gas annually, far exceeding other Organization for EconomCooperation and Development (OECD) countries.













    New York natural gas delivered to consumers (in millions of cubic feet),


    electric power




    Source: U.S. Energy Information Administration

  • 7/27/2019 Drilling-For-jobs in New York


    Drilling for JoWhat the Marcellus Shale could mean or New Yo

    July - 20

    2008 2011













View more >